THREE OPTIONS ON HEALTH CARE
The Bush administration is examining three types of individual health care savings accounts as means for controlling skyrocketing medical costs and decreasing the number of uninsured Americans, according to administration officials and outside policy analysts.
In recent weeks, administration officials have sent clear signals that President Bush and Health and Human Services Secretary Tommy G. Thompson want Congress to act on health care legislation in 2003, both because the problems of rising costs and the uninsured are worsening, and because the president would like to rack up some domestic policy accomplishments. Bush has already proposed offering refundable tax credits to help people afford health coverage on their own. Now, Thompson is exploring several models of individual health savings accounts, into which employers and employees would contribute tax-free funds to pay for medical costs up to a certain level; above that, a high-deductible catastrophic health plan would kick in.
On December 10, when Thompson held the first in a series of forums called "America Talks Health Care," the topic wasn't Medicare prescription drug benefits, the issue that dominated health care discussions in 2002. Instead, Thompson honed in on the problem of the uninsured. He called in John Goodman, president of the National Center for Policy Analysis, a conservative think tank, and Grace-Marie Turner, who heads the Galen Institute, a nonprofit, free-market research organization, to talk about the importance of new health care incentives targeted to individuals, particularly refundable tax credits. Both Goodman and Turner have long advocated market-based approaches to help the uninsured. Also speaking at the forum were representatives of Medtronic, a medical-device company whose workers have had individual health accounts for several years. [ read full article ]
SHOULD HEALTH BENEFITS BE TAXED
At a time when Congress is gearing up for a major tax reform debate, a group of mostly conservative economists is pushing an idea that could fundamentally alter the employer-based health care system.
Currently, contributions that employers make to group health insurance policies for their employees are excluded from taxation. The contributions aren't counted as part of an employee's income, so employees don't have to pay payroll taxes or income taxes on the contribution.
Some free-market economists complain that the tax break fuels excessive spending on health care. They argue that employees--including high-income employees--get an unlimited tax break to buy Cadillac health insurance plans and thus have little incentive to restrain their use of the health care system. Critics of the exclusion also note that many lower-income people get no help at all from the tax code because they are unemployed or their employer doesn't offer a health care benefit. About 45 million Americans today have no health insurance.
As a first step toward addressing the issue, the economists suggest that a cap be placed on the amount an employer can contribute to an employee's health insurance plan before the contribution is counted as income--and thus subject to taxation.
House Ways and Means Committee Chairman Bill Thomas, R-Calif., has criticized the tax incentives in employer-based health insurance, and those who are pushing for change say they are hopeful that Thomas will use any tax bill this year to alter those incentives. [ read full article ]
NEW PUSH FOR HEALTH SAVINGS ACCOUNTS
Proponents of free-market health care--and of health care savings accounts, in particular--will soon have a new resource to advance their cause. The National Center for Policy Analysis, a Dallas-based conservative think tank, is partnering with the World Health Care Congress, an annual gathering of top executives and government officials from the health care field, to create a working group aimed at ensuring the success of the health savings accounts.
Even as proponents work to achieve greater tax advantages for HSAs, President Bush's tax reform commission this week recommended eliminating tax-free HSA contributions. It's not that commission members want to dampen enthusiasm for HSAs, but adopting such a recommendation could have that effect, said Michael F. Cannon, director of health policy studies at the libertarian Cato Institute.
Although most Democrats have resisted HSAs, conservatives and some moderates see them and other "consumer-driven" health care approaches as playing a major role in helping to reduce both skyrocketing medical costs and the growing ranks of the uninsured--now nearing 46 million Americans. Consumer-driven health care solutions emphasize giving people more choice in tailoring insurance and health plans that suit their needs, and in deciding how to spend their health care dollars.
"A majority of people in health care believe that consumer-driven health care has the potential to change the whole health care system," said John Goodman, president of NCPA and one of the people instrumental in developing the medical savings account concept. [ read full article ]